In the investment market, there is never a shortage of adventurers. As long as I feel that the opportunity has arrived, I would rather risk the loss of principal and enlarge the leverage to gamble. The characteristic of graded funds is leverage, which is also the charm of graded funds. The following small series will give you a detailed introduction to the leverage calculation of graded funds.

I. Lever calculation of graded funds

Levers of graded funds are divided into initial leverage, net leverage and price leverage.

1. initial leverage: the initial leverage is the leverage ratio at the time of fund issuance, that is, the ratio of the sum of A share and B share to B share. The specific formula is:

Initial leverage =(A +B)/B.

When the proportion of mainstream products in the market is mostly 1: 1 or 4:6, the initial leverage is 2 or 1.67.

2. Net leverage: Net leverage is the ratio of the net growth rate of the progressive part of the graded fund to the net growth rate of the parent fund. The specific formula is:

Net leverage = total net value of parent fund/total net value of share B.

= (number of shares of parent fund * net value of parent fund)/(number of shares of B * net value of shares of B)

= (parent fund net value /B share net value) * initial leverage

3. Price leverage: it is the change multiple of the B share price relative to the parent fund's net value performance, that is, the total net value of the parent fund divided by the total market value of the B share. The specific formula is:

Price leverage = total net value of parent fund/total market value of share B.

= (number of shares of parent fund * net value of parent fund)/(number of shares of B * price of shares of B)

= (parent fund net value /B share price) * Initial leverage

= net leverage /( 1+ premium rate)

Second, are the levers always the same?

Of course not. Accurately speaking, share leverage refers to the leverage ratio when the fund is issued, but with the buying and selling of AB shares, the leverage will change. However, some grading foundations have agreed on the proportion of share matching in advance to keep the share leverage unchanged. Even if new funds enter the parent fund, they will be split according to the original proportion.